This open enrollment season, employers and workers alike are again confronting high cost increases for health coverage, with family premiums now averaging over $28,000 a year. Some small companies report spending more on health insurance than they make in profit.
For the past decade, the federal government’s response to rising employer costs has been to improve price transparency—the theory being that so long as companies know the price of things, they can shop around or negotiate their way to lower costs. But disclosure is not enough, we were told during interviews with employers, benefits consultants, claims administrators, and legal and policy experts. Few outside the very largest employers can turn price information into leverage.
This is true even when it is the employer who directly foots the medical bills. Companies with such “self-insured” plans cover two-thirds of the 165 million Americans who get insurance through their job. They should have the clearest line of sight into health costs, but they don’t.
That’s because self-insured employers usually hire a claims administrator, known in the industry as a third-party administrator or a “TPA.” It’s the TPA that actually assembles a network of doctors and hospitals and processes the bills. The arrangement works well so long as the TPA’s incentives align with the employer’s, but often they don’t.
For instance, many market experts we spoke with pointed to particular fees as evidence that saving employers money isn’t always TPAs’ first concern. One fee, known as a “shared savings fee,” was described by experts as drastically inflating employer costs. A legal expert highlighted the impact of a shared savings fee with a hypothetical example in which a medical provider sent a bill for $100,000, the TPA negotiated the price down to $1,500, and then charged the employer $30,000 for negotiating that discount. To the employer, this would be reported as a $31,500 total claim. “I don’t think they really tell you that $30,000 of that is a fee,” the expert said.
Even if the employer does get a fee breakdown—as some recent regulations require in select cases—then what? National insurance carriers have bought up independent administrators and bundled specialty vendors into all-in-one packages, so there aren’t many places for employers to go. Switching TPAs also often means changing provider networks, which draws pushback from employees.
There are fixes experts say are worth pursuing: contract terms that cap fees and require data access, transparency requirements with actual enforcement teeth, and clearer rules on whether administrators, not just employers, bear some fiduciary duty to spend health plan dollars wisely. But each of these avenues has limits. Enforcement resources tend to flow to the employers big enough to demand them. And even a well-informed employer can’t negotiate hard if there’s no credible alternative.
A handful of self-insured employers have tried opting out of the current system entirely. Some contract directly with local hospital systems. Others have shifted to fully insured coverage or sent employees into the ACA market after providing them with a defined premium contribution to cover some of the costs of their coverage. These paths, however, require a geographically concentrated workforce, deep administrative capacity, or a stable individual marketplace.
This year, Congress enacted striking new transparency rules for pharmaceutical benefit managers as part of the Consolidated Appropriations Act of 2026. These require extensive disclosure to employers and limit some PBM fee practices. But to really lower costs, the rules need to do more than mandate disclosure. They need enforcement that doesn’t assume every employer has the power, leverage, and resources needed to enforce its own rights. And they need to go beyond PBMs and reckon with an industry that has consolidated to the point where knowing the price doesn’t mean you can take your business elsewhere.
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